Buying property in Cape Town

property in Cape Town
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Updated 2019-10-03 14:44

If you have set your sights on Cape Town - one of the most beautiful cities in the world - great idea! If you have chosen the perfect neighbourhood as well as the type of property you dream of purchasing, perfect. Now, here's the list of essential steps to follow to make your project a success.

Requirements for buying property in Cape Town

First, be aware that you can legally become a real-estate owner in Cape Town regardless of your visa and your residency permit (temporary, semi-permanent or permanent). You can even buy property in Cape Town without living in South Africa.

You will also be pleased to know that in South Africa, the purchase procedure is much simpler and faster than in other Western European countries: there is no need for a promise of sale and a definitive contract, nor for a bank loan authorisation that can take a long time to be granted ... and which may not even be approved!

How to purchase property in Cape Town

Once you have found the home you want to buy, a signing takes place, and this constitutes a definitive link between the seller who is now obligated to sell and the buyer who is obligated to buy. To make an offer is to commit definitively, from the moment the seller accepts it.

A first payment of 10% of the cost of the property is requested at the signature, which usually takes place three days - and more rarely 15 days - after the contract has been confirmed. From there, the buyer has around 15 additional days to make the rest of the payment or to produce a sufficient bank guarantee to delay the payment. It is recommended that you pay the funds directly to the lawyer responsible for the transaction, in order to keep a proof of payment in case of quick resale. You then avoid any difficulties with the SARS, the equivalent of the South African IFCS.

Another important point is that a non-South African private buyer cannot borrow more than 50% of the price (including VAT) of the property from one or more banks. You must, therefore, have at least half of the amount in cash. As a result of this, all prospective buyers begin with a visit to their banker and lawyer to determine and agree on the maximum budget available to them to buy. With the bank agreement being pre-approved in principle, the buyer can begin their property search and is ready to sign when he finally finds the house they are looking for.

 Good to know:

In South Africa, many taxes and additional costs are added to the price of the house! It is, therefore, necessary to take these into consideration before you decide: agency fees (equivalent of notary and registration fees) transfer fees, etc. These can reach up to 15% of the original price. Also note that if the seller is not South African, an additional transaction fee will be added to the amount to be paid. Do not forget that the interest rates on home loans are much higher in South Africa than elsewhere: they are currently close to 10%.

Before signing, make sure you have obtained the "Clearance Certificate" which certifies that the seller has settled all payments of outstanding invoices. You can then take the opportunity to ask for housing plans - essential if you are considering work and interested in submitting the plans to an architect who can check and help you avoid any nasty surprises.

The law and its application vary widely and regularly: it is, therefore, essential to be advised by experts throughout the process.

Things to keep in mind before buying property in Cape Town

From a practical point of view, and depending on the area in which you plan to invest, learn about the immediate area and its real estate options, just to avoid finding yourself twelve months later with a building that ruins your previously beautiful view of the sea. Also keep in mind that while the real estate market in Cape Town has exploded in recent years, things have also changed due to considerations such as repeated droughts and load-shedding - or power offloads, meaning up to 6 hours a day without power - just two issues which have significantly impacted daily life in Cape Town and discouraged some investors. This does mean, however, that the housing market has stabilised or even lowered in terms of price: so it is a great chance to negotiate!

 Useful links:

A reference in terms of real estate agency
A reference in terms of banking services
CT property
Property24
Businesstech

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